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Rush-owned property near Peninsula High could be sold to school district … or, it could become 130 homes
Two plans unfolding in Purdy promise to help shape the unincorporated community’s future.
Rush Companies is working to build a new subdivision of 130 homes, packed tightly on land bordering busy 144th Street. The developer has already spent thousands of dollars on permitting fees and applied with the city of Gig Harbor to extend sewer lines to the property, which lies outside city limits.
Meanwhile, the Peninsula School District expects in the next few months to acquire 25 acres, most of it a 20-acre chunk east of Peninsula High School. The district has a signed purchase-and-sale agreement for the property, along with $6.5 million financing. It sees the land as a key acquisition to support future expansion.
One odd thing about these initiatives: only one of them can proceed to completion, because both require using the same land.
Rush pursuing two paths
Rush Companies owns the property. The fact that it is neck-deep in pursuing two mutually exclusive futures for its Purdy holdings speaks volumes on the firm’s desire to hedge its bets in an area where zoning codes are in flux.
Under changes in the draft update of the Pierce County Comprehensive Plan — which the Pierce County Council must approve by the end of 2024 — Purdy would lose its status as part of the city of Gig Harbor’s urban growth area (UGA). In the state’s Growth Management Act, UGAs are communities just outside cities’ and towns’ borders that are slated to receive higher density development. Leaving Gig Harbor’s UGA would limit development in Purdy, through a likely downzoning of property there and lower probability of urban infrastructure, including sewers, being extended.
County planners recently flip-flopped on their recommendation for Purdy’s future and now say the area should remain in Gig Harbor’s UGA. But implementing this change would require a formal amendment to the draft comp plan. Robyn Denson, the Pierce County Council member whose district includes Purdy, said she’ll oppose any such change. The city of Gig Harbor is urging the county to keep Purdy out of its urban growth area.
School district interested
School district officials said they learned several years ago that Rush Companies might be willing to sell them the property. The district and the developer have been in discussions ever since. The 20 acres east of the high school are bounded by 144th Street to the north, 62nd Avenue to the west, Highway 16 to the east and existing school district property to the south.
This map shows Rush Companies’ proposed 130-home subdivision in Purdy, superimposed on the Peninsula School District planned land purchase, outlined in red. If Rush’s development plan moves forward, its sewer line will traverse its strip of land south of Peninsula High School, and stormwater will flow through that property to a water quality/detention facility that is on other, mostly Rush-owned parcels to the south.
The sale also includes a strip of approximately 5 acres bordering Peninsula High School’s southern property line. That parcel stretches from 62nd Avenue at the land’s eastern end (near the PHS’s back bus entrance/exit and its landmark boulder that wears decades worth of green paint and graffiti) to Purdy Drive in the west.
The opportunity to buy so much land in a single purchase is “kind of a dream,” school district board president Natalie Wimberley said at the July 22 school board meeting, when members voted to authorize the purchase. Large, well-located parcels like this are “not available very often,” Director of Capital Projects Patrick Gillespie said at the meeting.
A well-known landmark at the bus entrance to the Peninsula High School campus. Across the street is Rush Companies’ land that the school district proposes to buy.
No specific plans, school district says
“While [Peninsula School District] has no specific plans for use of this property yet, its intention is to keep the door open to future opportunities” by purchasing it, said Danielle Chastaine, district communications coordinator. “This is an investment for PSD’s future by allowing us to execute long-term capital improvement plans.”
The school board authorized the district to pay Rush Companies $315,000 in earnest money, which is refundable through the end of this month while the district completes a feasibility study of the land.
The district had hoped to finish the acquisition by January 2025. So far, its investigation into the property has found an issue with a well that might require study beyond Nov. 30, Peninsula School District Chief Financial Officer Ashley Murphy said. That could result in the district delaying buying the small piece of property that contains the well, but still closing on the majority of the land in January, she said. The topic is on the school board’s agenda for a meeting Tuesday, Nov. 12.
To finance the purchase, Peninsula School District can thank its $198.55 million voter-approved bond measure from 2019. That financing already paid for construction of two new elementary schools and for upgrades to other facilities. The $6.5 million for the land purchase comes from interest earned on the bond sale proceeds while in the district’s Capital Projects Fund, as well as matching funds provided by the state, district sources said.
“There’s no levy, there’s no tax implications associated with” the land purchase, CFO Murphy said at the July board meeting. The $6.5 million is “not bond dollars, but dollars that were earned upon bond dollars, that are now free for us to use for something like a land purchase.”
Rush seeking approval for new housing
But later last summer, Rush Companies began filing paperwork with Pierce County to enable development of most of the 20.06 acres fronting 144th Street in a manner starkly different from the school district’s vision.
Rush proposes to build 130 single-family homes and duplexes on that property’s 15 developable acres, according to a document filed with the county by Rush Companies’ agent, Federal Way-based MacKay + Sposito. Land would be set aside in the northeast corner for a water tank serving the development and in the southeast corner to protect a stream and wetland.
Rush Companies owns 20.06 acres along 62nd Avenue near its intersection with 144th Street. Peninsula School District has a signed purchase-and-sale agreement for the property.
If built, the development would bring 4,150 linear feet of public roadway. Runoff from pollution-generating hard surfaces would flow through storm sewers to a water detention and treatment facility at another Rush Companies property away from the site, MacKay + Sposito wrote.
The school district believes Rush Companies’ 130-home development won’t happen. Murphy said Rush has been “transparent” about this other project. The developer is hedging its bets by creating a fallback option for the property, she said.
Rush Companies confirmed it was pursuing the 130-home development in Purdy but declined to comment on the potential sale of the same land to the Peninsula School District.
Rush has options
In fact, by pushing the property’s future forward in two different directions, Rush is creating a matrix of possible outcomes worthy of a business school exercise.
Whether or not the 25 acres winds up in Gig Harbor’s urban growth area, Rush Companies can sell to the school district and walk away with $6.5 million. That’s likely less than the company would make from developing 130 homes, but it’s more than double what the it paid for the property. Rush bought the land in multiple transactions, most of them occurring more than 15 years ago.
(The district, if it completes the acquisition, needs to work with the county to ensure the land receives Public Institution zoning, which allows public-owned facilities and institutions).
If the land stays in the UGA and the deal with the school district falls through, Rush gets to pursue its 130-home project under the current urban zoning, provided that other pieces of its plan, including obtaining sewer service from Gig Harbor, fall into place.
But what if Purdy leaves Gig Harbor’s UGA and the school district cancels the land deal? Rush Companies has its bases covered there, as well. The preliminary plat application for 130 homes was filed before any zoning changes, so the application is vested (or grandfathered in) under pre-existing rules. And if the Peninsula School District pulls out of the land acquisition after Nov. 30, Rush also gets to keep the $315,000 earnest money.
If Rush Companies pursues the 130-home development — whether inside or outside Gig Harbor’s UGA — it still needs to connect to the city’s sanitary sewer system. Paradoxically, the purchase and sale agreement with the school district helps to ensure the developer gets that service, in the event the district’s land purchase fails to close due to the district pulling out of the deal.
The northeast corner of Rush’s 20.06-acre parcel, near where 144th Street passes over Highway 16. The property includes four older single-family residential structures. The purchase and sale agreement between Rush Companies and Peninsula School District provides for their removal, if the district chooses that.
Connecting to sewer
The city of Gig Harbor’s sewer system now extends to a “lift station” on Purdy Drive, near the driveway to Peninsula High School’s front entrance. This location is also at the eastern end of the strip of land south of the high school that the district is trying to purchase. In support of its development plan, Rush can extend a sewer line eastward across the strip, ending near the southeast corner of the Peninsula High School campus.
From the proposed subdivision’s southwest corner, the sewer can be extended further south and west a short distance across public right-of-way on 62nd Avenue. Then it hits a small area of school district property that separates it from the sewer line running up Rush Companies’ strip of property from the lift station.
The purchase and sale agreement contains a section called the North-South Utility Easement. It gives Rush Companies permission to run sewer line through this gap on school district property, connecting the 130 new homes on 144th Street with the lift station on Purdy Drive. The easement becomes effective after 30 days pass from the date the purchase and sale agreement was signed (this time has elapsed already) and if the district chooses to pull out of the sale.
Rush is required to pay the school district fair market value for this easement, as determined by an appraiser chosen by the district and Rush. The agreement also allows Rush to pull out of the sale if it does not receive the North-South Utility Easement according to the terms of the contract.
In other words, in the very document that sells the land to the school district – thereby killing Rush Companies’ planned 130-home project – is the provision for the missing sanitary sewer link that Rush needs to complete the development, should the sale fall through.